Answer:
The NPV using MARR of 18% is 1,257,004. Since the NPV is positive, accepting the project is justified.
Explanation:
NPV=TVECF−TVIC
Where
TVECF is the present value of the expected cash flow; and TVIC is the present value of invested amount
Saving 1,550,000
Les Costs:
maintenance 350,000
income tax 150,000 <u>500,000
</u>
0-9 1,050,000
10 1,050,000
+200,000= 1,250,000
Year inflow [email protected] 18% sum
0 -3,500,000 1 -3,500,000
1 1,050,000 0.847458 889,830.5
2 1,050,000 0.718184 754,093.7
3 1,050,000 0.608631 639,062.4
4 1,050,000 0.515789 541,578.3
5 1,050,000 0.437109 458,964.7
6 1,050,000 0.370432 388,953.1
7 1,050,000 0.313925 329,621.3
8 1,050,000 0.266038 279,340.1
9 1,050,000 0.225456 236,728.9
10 1,250,000 0.191064 <u> 238,830.6
</u>
NPV 1,257,004
